Professor Stiglitz
Stiglitz's "Free Chinese Airplane Ticket": China Is Still a Developing Country, a Poor Nation, I Cannot Add Burden to China
By Zhang Tingbin
In Ji Mo's eyes, Professor Stiglitz’s (hereafter referred to as the professor) 35-hour visit to China was measured in minutes. She often took out the professor's schedule and rushed through each item in order to catch the 11:48 PM flight on the evening of May 15th when the professor would fly back to the United States. This was a short and exhausting trip; the time the professor spent on the ground in Shanghai was probably not much different from the time he spent flying, which might not even be enough to adjust to the time difference. Yet, during this brief period, the professor participated in Mayor Han Zheng's mayor consultation meeting in Shanghai, attended the Lujiazui Forum and delivered an important speech — "The American financial system has failed, China should learn from it."
This speech quickly spread to the world through the media, interspersed with multiple meetings and interviews. It was only during the professor's English interview with CBN that Ji Mo had a chance to breathe and talk about the professor from her perspective. Ji Mo is an Eastern woman with the grace of an orchid. She is the professor's Ph.D. student and has been his assistant for his trips to China over the past four years. When discussing the $200,000 appearance fee for another Nobel Prize-winning economist's recent visit to China, she was quite shocked. She said that, to her knowledge, Professor Stiglitz had never received any appearance fees. "Not to mention appearance fees, even the round-trip tickets for each of the professor's visits to China were not paid for by China. This time, his round-trip ticket to China was sponsored by an Italian academic institution for one leg and a German academic institution for the other. He has never spent money from the Chinese government for his trips to China."
"I was also very curious as to why the professor acted this way and asked him the reason," she said. The professor's response was: "China is still a developing country, a poor nation, and I cannot add economic burden to China." This really came as a surprise to CBN reporters. Stiglitz won the Nobel Prize in Economics in 2001 and is the most famous expert in public sector economics. Whenever the Chinese government seeks opinions from the international economics community, he is always a distinguished guest. At the March 2008 China Development Forum, Premier Wen Jiabao met with Professor Stiglitz, and just six months later, when Premier Wen visited New York to meet with prominent figures in the American economic and financial sectors, Professor Stiglitz was again a distinguished guest.
For such a distinguished Chinese guest, providing round-trip tickets is a reasonable obligation for the event organizers, but the professor declined and preferred to seek sponsorship himself to buy the tickets — a small secret that few knew about. If it weren't for this ten-minute chat, this little secret might have remained unknown forever.
Conscience, Courage, and Frankness
Compared to this lesser-known, somewhat stubborn small habit, what the professor is widely known for is his conscience, courage, and frankness. The professor is not someone who speaks according to the host's intentions. In March 2006, during his speech at Peking University, he warned: "During the 11th Five-Year Plan period, China will continue its transition to a market economy. During this process, China must guard against the influence of interest groups and limit their impact on the economy to the smallest degree possible." He also believed that in areas like energy prices, the negative influence of interest groups on the economy had already become apparent.
The professor is also not a scholar who speaks according to the intentions of his own politicians. After the Bush administration became obsessed with Middle Eastern oil and launched the Iraq War, finding itself stuck in a quagmire while coveting Iran, in March 2008, on the fifth anniversary of the Iraq War, the book co-authored by the professor and Harvard's Linda Bilmes, "The Three Trillion Dollar War," was published. The book revealed: "The war will cost the U.S. three trillion dollars, and there will be an additional three trillion dollars cost that the rest of the world will have to bear... This far exceeds the Bush administration's pre-war expectations." He severely criticized the Bush administration, not only for misleading the world regarding the possible costs of the war but also for continuously trying to cover up the grim reality as the war progressed.
The professor is also not an economist who speaks according to his boss's intentions. Dr. Zhang Ming from the Institute of World Economics and Politics at the Chinese Academy of Social Sciences once wrote an article titled "Stiglitz: A Failed Official and a Successful Scholar," in which he recounted two stories. One story talked about his relationship with his university "boss" — he was unconventional and rarely worked at one university for more than five years, instead moving like a migratory bird among the prestigious economics departments of American and British universities, earning tenure honors at each. His independent nature made the economics departments where he worked both love and hate him. This can be seen from a joke about him: It is said that when he was a professor at Yale University, the employment contract the school signed with him actually included additional clauses such as: he must wear shoes in class and provide proof that he had rented a house — he often worked late into the night and slept on the sofa in his office, leading people to believe he was intentionally freeloading on the university's housing.
More famously known is the conflict between the professor and his most renowned "boss" — the World Bank. In 1997, he assumed the position of Senior Vice President and Chief Economist at the World Bank. Soon after, the world witnessed successive financial crises in Southeast Asia, Russia, and Brazil. The IMF and the World Bank "opportunistically" appeared, all carrying the same "four prescriptions" for the professor to promote:
First prescription: Privatization. Leaders of recipient countries need only agree to sell off state assets at low prices, and they will receive a 10% commission, all deposited into secret accounts at Swiss banks.
Second prescription: Capital market liberalization. This means that capital can freely flow in and out of local markets, often gathering speculative funds towards real estate, stock, and currency markets, forming asset price bubbles. When crises occur, these inflows of speculative capital are the first to flee, draining the foreign exchange reserves of affected countries within days or even hours.
The subsequent "help" from the IMF includes tightening credit lines and raising interest rates to absurd levels of 30%, 50%, or even 80%. Such high-interest rates mercilessly destroy real estate values, damage industrial production capabilities, and drain society's accumulated wealth.
Third prescription: Market pricing. When affected countries are dragged almost to death by the IMF, the IMF seizes the opportunity to drastically increase prices for daily necessities such as food, drinking water, and natural gas, causing social unrest and worsening investment environments. Investment capital flees, leaving behind extremely cheap assets awaiting the gaping mouths of foreign capital that have long drooled over them.
Fourth prescription: Reduction of poverty strategies - free trade. Stiglitz compared WTO's free trade clauses to the "Opium Wars," particularly expressing indignation over "intellectual property" clauses. Paying such high "intellectual property" "tariffs" for branded drugs produced by Western pharmaceutical companies is tantamount to "cursing the local population to death; they (Western pharmaceutical companies) simply don't care about the lives of the people."
These prescriptions were contrary to the professor's research findings. He believed that due to incomplete information and information asymmetry, market operations sometimes fail, thus they are absolutely not omnipotent. Therefore, Stiglitz consistently strongly opposed "market fundamentalism" — those holding this view believe that markets are omnipotent and government intervention is unnecessary, so complete privatization and marketization should be implemented. The professor considered this precisely the most dangerous enemy in the era of globalization.
Dignity Resists Bribery
Conflicts with his bosses meant making a choice: either compromise and conform, or angrily leave. This was actually a choice the professor had to make between academic dignity and status wealth. If he chose to compromise and act against his theories — what could be more valuable to market fundamentalists than a leader of anti-market fundamentalism contradicting himself? As a reward, he might have become the most revered master and true power-wielder in the Western mainstream economics community. Such things are not without precedent.
In 1966, at the age of 40, Greenspan published the book "Gold and Economic Freedom," writing: "Without a gold standard, there will be no way to protect (people's) savings from being devoured by inflation, and there will be no safe haven for wealth." However, after embracing JP Morgan, he never mentioned the monetary status of gold again and subsequently rose rapidly, becoming the chairman of the Federal Reserve in 1987 and the most glorious ruler of the Fed for the next 18 years, the financial emperor of the Western economic world.
However, the professor chose to say "no." As the chief economist and senior vice president of the World Bank, he sharply criticized the "Washington Consensus:" "At best, it is incomplete; at worst, it is misleading." As an important member of one of the "Washington Consensus" institutions, the World Bank, yet publicly criticizing the "Washington Consensus," he clearly offended a considerable number of people at the IMF and the World Bank. The World Bank could no longer accommodate him. He was once besieged by the mainstream economics community. Therefore, he was soon required to resign. As a scholar, Stiglitz was successful, but as a politician, Stiglitz was a failure. As one of the few upright scholars in the Western mainstream economics community willing to speak for the legitimate interests of developing countries, he maintained his morality and conscience but had to leave.
Thereafter, he entered Columbia University and restarted teaching and research. As a re-academicized professor, he became even more incisive and courageous, winning the trust of the world with his conscience and courage, and gaining greater discourse power in the popular domain. He published the famous book "Globalization and Its Discontents," which was an open indictment of the IMF. In the book, he advocated for the democracy and openness of international economic and financial policy formulation and demanded reform of major international financial organizations. More importantly, he issued a moral challenge to authoritative economists and international policymakers, pointing out their wrongdoings of placing Wall Street financial capital interests above those of impoverished nations, calling for economics and economic policies to return to humanity.
Later, in the book "The Roaring Nineties," he further warned: if the international economic and financial community does not make changes, it will be difficult to avoid larger crises in the future — a prophecy that turned out to be eerily accurate! In the aftermath of the current Wall Street financial crisis, when all frauds and lies were exposed, many economists and financial experts lost their credibility, but only a few scholars like the professor gained more respect and trust from the world. Their existence defended the last dignity of economics, becoming the final unextinguished hearth and candle in the cold winter after the great wealth disaster, preserving the last spark to ignite a new bright future for humanity.
As a young economist, Zhang Ming expressed admiration for the professor in a telephone interview. He said: Although Stiglitz suffered greatly in political struggles and faced criticism after publishing his books, he showed "unyielding determination." His achievements in economics are certainly worthy of admiration, but his firm defense of truth and conscience and his refusal to compromise with authority deserve respect and vigilance from Chinese economists in the transformation period. His respectful and amicable approach to dealing with the public is also worth our reference. His last words reminded me that, face-to-face and shoulder-to-shoulder with the professor, the professor was not as solemn as when he gave speeches on stage. With a round face and gray beard, his round eyes were filled with kindness. Two airplane tickets gave the Chinese a new perspective on recognizing Stiglitz.
